News story

Copyright industry adds an extra £3billion to national accounts

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Welcoming the announcement Baroness Wilcox, Minister for Intellectual Property, said: “This is excellent news not just for the UK economy…

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Welcoming the announcement Baroness Wilcox, Minister for Intellectual Property, said:

“This is excellent news not just for the UK economy, but also because it shows that Government is serious about understanding and promoting the creative industries.”

The new estimates have been developed over the last year as part of the IPO’s economic research programme to establish a more accurate picture of intellectual property in the UK. The study drew on new information provided by the publishing, music and film industries on their investment in copyrighted work, which generates long term revenues for the UK.

This new initiative has been a collaborative effort between the Office for National Statistics (ONS), IPO, Imperial College and the creative industries. It reflects the increased importance of intellectual property in today’s economy.

The IPO’s Chief Executive, John Alty said:

“Government policy recognises the vital importance of innovation in the creative sector. It is more important than ever that we should capture this investment in the way we measure the economy - adding to the UK’s economic capability.

“We welcome the drive for good evidence and the collaboration between industry, researchers and Government which has made this work possible.”

Sarah Faulder, Chief Executive of the Publishers Licensing Society (PLS) said:

“PLS is delighted to have been able to play a part in ensuring that the value of the UK’s publishing industry is more accurately reflected in the national statistics. Whilst we believe there is more work to be done to ensure the scale of the industry is fully reflected, we commend the IPO for having undertaken this crucial and challenging task at a time when copyright policy is under review by the Government.”

The new estimates are summarised below, and set out in _‘Updating the Value of UK Copyright Investment’ _published by the IPO and Imperial College today at http://www.ipo.gov.uk/ipresearch-year-2012.htm

Summary

The role of intangible assets in the System of National Accounts (SNA) reflects the growing role of knowledge investment in firms and the economy. Software and copyright assets (artistic originals) were included in the SNA in 1992, and the UK fully reflected the software change in 2007[1]. Research and Development will be included in the SNA, first as a satellite account, in the next three years, and the ONS has already started work on the compilation[2].

This note reports on collaboration between Imperial College, the ONS, the IPO, and industry sources to improve measurement of UK investment in artistic originals. Focus was placed on the creation of long-lived artistic original assets protected by copyright, as defined by the SNA. These include new broadcast programmes, books, art, music and films.

Investment is part of final Gross Domestic Product (GDP) and copyright works are assets that contribute to economic growth, so the framework to account for copyright investment was developed, as reported by Goodridge and Haskel in July 2011[3].

This update to the work suggests that UK investment in copyright was approximately £5.1bn in 2009, or £3.2bn higher (0.3% of Gross Value Added (GVA) higher[4]**) than existing official data **recorded in the UK National Accounts, for the comparable series on pure copyright investment.

Table 1: UK Investment in artistic originals, 2009, £m (nominal)

Total

Film

TV / Radio

Books

Music

Misc Art (2008)

National Accounts data for 2009 as estimated in the ONS Blue Book (adjusted for comparability)

1,807

32

1,447

152

176

n/a

Estimates from new methodology **and additional data**

5,089

264

2,104

1,020

1,331

370

The ONS will evaluate the methodology for artistic original estimates. Revisions to published data arising from methodological improvements will be fed into national accounts once changes have been approved and quality-assured.

One issue to settle before these new estimates can be used in compiling GDP is the treatment of margins. Broadly speaking, estimates of investment can be based on either cost or revenues data. Where investment is based on revenues, the estimates will implicitly include monopoly rents earned by the owner of the asset. Where investment is estimated by using cost figures, one option in copyright valuation is to add a mark-up over the costs to represent the monopoly rents available from copyright, making the result conceptually consistent with a revenues-based estimate. The figures used for Film, TV/Radio and Miscellaneous Art estimates are all cost-based, and the ONS have traditionally marked up the total TV/Radio figures to represent the value of holding monopoly assets, as illustrated in Table 2:

Table 2: Investment Mark-up for monopoly returns, 2009, £m (optional)

Total

Film

TV / Radio

Books

Music

Misc Art (2008)

National Accounts data for 2009

1,637

0

1,637

n/a

n/a

0

The mark-up approach has not been used for the estimate of copyright investment so this figure is in addition to the results from the new methodology. This was done for greater consistency with official methods for own-account software investment and R&D. It may be appropriate for the estimation of copyright protected assets, if the ONS so judges.

The new estimate includes £370m as an estimate of miscellaneous art. This was uncounted before; the method of measuring this is still being refined and requires validation.

Notes to editors:

  1. Updating the Value of UK Copyright Investment can be accessed from: http://www.ipo.gov.uk/ipresearch-year-2012.htm
  2. The Intellectual Property Office (IPO) is within the Department for Business, Innovation, and Skills (BIS) and is responsible for the national framework of Intellectual Property rights, comprising patents, designs, trade marks and copyright.
  3. Its role is to help manage an IP system that encourages innovation and creativity, balances the needs of consumers and users, promotes strong and competitive markets and is the foundation of the knowledge-based economy.
  4. It operates in a national and an international environment and its work is governed by national and international law, including various international treaties relating to Intellectual Property (IP) to which the United Kingdom is a party.
  5. For further information, please contact Veena Mapara: veena.mapara@bis.gsi.gov.uk; 020 7215 5614.
  6. For emergency media calls out-of-hours please contact the duty press officer at the Department for Business, Innovation and Skills on +44 (0) 20 7215 3505.
  7. BIS’s online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See http://www.bis.gov.uk/newsroom for more information.

[1] Graeme Chamberlin, Tony Clayton, Shikeb Farooqui, New Measures of UK Private Sector Software Investment, ONS May 2007, http://www.ons.gov.uk/ons/index.html
[2] Lars Wenzel, Khalid Khan, Peter Evans, Capitalising Research & Development; towards the new System of National Accounts, ONS 2009. http://www.palgrave-journals.com/elmr/journal/v3/n9/abs/elmr2009156a.html
[3] Peter Goodridge and Jonathan Haskel. 2011. “Film, Television & Radio, Books, Music and Art: UK Investment in Artistic Originals.” IPO economics report 3/2011, http://www.ipo.gov.uk/ipresearch-copyinvest-full-201107.pdf
[4] This is a percentage of 2009 GVA (£1, 2565, 932m) from the ONS data series ABML http://www.ons.gov.uk/ons/rel/naa1-rd/united-kingdom-economic-accounts/q3-2011/tsd-united-kingdom-economic-accounts-q3-2011.html

Notes to Editors

Contact Information

Name BIS Press Office Job Title

Division Department for Business, Innovation & Skills Phone

Fax

Mobile

Email bispress.releases@bis.gsi.gov.uk

Name Veena Mapara Job Title

Division Department for Business, Innovation & Skills Phone 020 7215 5614 Fax

Mobile

Email veena.mapara@bis.gsi.gov.uk

Published 8 June 2012